The new City buzzword: BAB (that's Bonuses are Back)

It was an agreeable way to spend a balmy evening: a summer drinks party held in the lush surroundings of London's oldest botanical garden.

Champagne glasses clinked as guests from business, politics and entertainment mingled at the elegant soirée hosted by the City public relations supremo Alan Parker at the Chelsea Physic Garden on Tuesday.

The Marks & Spencer boss Sir Stuart Rose rubbed shoulders with Stephen Fry and Jack Straw as leading bankers talked excitedly about the new buzzword in their born-again sector: BAB.

BAB stands for Bonuses are Back, and its arrival in the lexicon of the Square Mile is evidence that bankers are once again looking forward to bumper payouts, just eight months after the sector faced meltdown and governments worldwide were required to prop them up.

It is universally accepted that the vast rewards available to bankers for taking huge risks were the root cause of the crisis, but nevertheless Goldman Sachs's 28,000 staff – 5,400 of them in London – are now looking forward to the biggest payouts in the bank's 140-year history. Credit Suisse, Deutsche Bank, Barclays Capital, JP Morgan and Morgan Stanley are also anticipating bumper profits.

Even Royal Bank of Scotland, which is now 70% owned by the UK taxpayer and was supposed to restrict the way it pays bonuses, is back in bonanza mode. In March, a key executive was awarded millions of shares and options, already worth more than £8m. This week it emerged that the new chief executive, Stephen Hester, has a £15m pay package.

Just months after showing staff the door there's a hiring frenzy in the investment banks. Business is booming – in no small part as a result of the financial chaos caused by the bankers. The bond markets are hectic as a result of governments' need to finance their deficits, while economic problems have created (profitable) volatility in the foreign exchange markets. Even guaranteed bonuses have made a comeback.

BAB neatly summarises a zeitgeist in the same way as "greed is good" and "masters of the universe" came to stand for the heady days of 1980s Wall Street. "Irrational exuberance" – a phrase coined by the former federal reserve boss Alan Greenspan – became synonymous with the dotcom boom while Warren Buffett described derivatives as "weapons of financial mass destruction" – ultimately an entirely accurate prediction.